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Exploring Non-Traditional and Alternative Areas
of Work for Valuers in Thailand

                                                                                                                                             

Survey, Research, IT, GIS-CAMA, Education, and Publications

A paper presented at the 13th Congress of the ASEAN Valuers Association,
September 13-15, 2004 in Kuala Lumpur, Malaysia

Mr.Pratak Simapichaicheth
MCA (Economics), Victoria University
Cert. Appraisal, LRTI-Lincoln
Institute of Land Policy Chairman,
Thai Real Estate Business School

Dr. Sopon Pornchokchai
Ph.D. (Land & Housing)
Asian Institute of Technology
Cert. Appraisal, LRTI-Lincoln Institute of Land Policy
President, Thai Appraisal Foundation
 
Abstract
This paper explores the current need to explore non-traditional areas of work, be it for survival or growth and expansion. Issues confronting valuers all over the world have created a situation where valuers are increasingly required to look for work in alternative disciplines. With the goal of improving the situation faced by valuers in the long term, two possible alternatives are presented. First, valuers can remain in the industry by adopting new technologies and by becoming more specialized. Second, valuers can explore professional opportunities in related fields that are either valuation-based or real estate-based.

Keywords: valuers, valuation, appraisal, Thailand, profession

Introduction
Why do valuers need to explore non-traditional areas of work? There are two major reasons why one would conduct such a search. First, and more conventionally, is the internal drive to expand business horizons. However, exploring non-traditional areas of work for this reason may not result in a trend because it depends on the background, expertise, and initiatives of individual valuers-cum-entrepreneurs. Second, external environmental forces may drive the exploration of non-traditional areas of work. In the field of valuation, the demand for and relevance of conventional areas of work are dwindling and may eventually come to a point where one can no longer rely on them for a living. Therefore, non-traditional areas of work need to be explored as supplemental or alternative sources of income. This second reason may be the major concern for valuers in the world today.

Is There a Future for Valuers?
Social and economic conditions have changed, and valuers are being critiqued worldwide. Because in some cases appraised sales value is incongruent with the value estimated for a buyer, the credibility of valuers is being increasingly critiqued. McFarquhar (2000, 4) observed that valuers are on shaky ground in terms of career stability, even in highly developed countries such as in the United Kingdom where valuation has been an established profession for centuries. Bates (2001, 5) observed that appraisers in the USA are subjected to a similar plight.

In 2003, the World Valuation Congress held its 10th bi-annual world congress entitled “Is There a Future for The Valuation Profession?" at Cambridge University, United Kingdom (WVC, 2003). Some 250 participants gathered to discuss this main theme. Greenwood (2003, 6) summarized the discussions by stating that automated valuation models (AVM) and other technologies have reduced valuation services to the status of a commodity that can be produced at the lowest possible cost. He also concluded that in today's world, valuers will have to actively acquire new innovative skills in order to survive. These skills, however, have not previously existed in the domain of the valuers.

There has been increasing concern about the AVM dilemma, which is predicted to reduce the number valuers and their jobs worldwide. In the 2004, at the Appraisal Today Conference, Zillious mentioned that AVM is now widely used for tasks previously carried out by valuers such as pre-qualification, first mortgage, home equity, wholesale review, quality control, default and foreclosure, portfolio valuation tracking, and internet marketing. As a result, the need for valuation is likely to shrink drastically in the near future, particularly for residential properties, which are the major source of income for typical valuers.

There is much evidence that may be drawn to support this prediction. Valuation fees have been declining worldwide. In Australia, Bond (2003, 14-15) pointed out that the high cost of professional indemnity insurance, Aus$4,000 to Aus$10,000, has discouraged many valuers to the point where many have moved on to other professions. Ghyoot (2004, 7) identified the increasing pressure of cost competition among valuers. He suggested that valuers may consider other work alternatives, such as consultancy services in the areas of asset, financial, and real estate portfolio management.

The threat to valuers is not only limited to local valuation firms, but also to large international firms. Large accounting firms have diversified into property consultancy services, intruding upon the work opportunities of valuers. Given this situation, the future of conventional practices of valuers may not be bright. In a globalized world, issues become inter-related, but adaptation and development takes time. Therefore, it is critical that a paradigm shift takes place among valuers if the profession is to survive and to develop.

Therefore, it is critical that a paradigm shift takes place among valuers, if the profession is to survive and to develop into the future.

Being Competitive for Survival
There are two paths that valuers can take to become more competitive and survive in the changing world. First is to become acquainted with AVM-CAMA and learn to use these tools to the best advantage of the valuer. Second is to specialize within the field of valuation.

Valuers cannot avoid the use of the AVM or Computer-Assisted Mass Appraisal (CAMA). These technologies have been developing since the 1970's and have been accepted in the Uniform Standards Of Professional Appraisal Practice (USPAP, 2004). The International Association of Assessing Officers (IAAO, 2002) published the standards for CAMA in 2002. In 2004, IAAO (2004) also approved standards for AVM. A valuer in the contemporary world needs to know about the innovations brought on by CAMA and AVM and must adopt and apply these tools to their best advantage because CAMA and GIS (Geographic Information Systems) have already become widespread in the world of valuation.

Specialization
Being strong in a particular field is another way to gain an edge over one's competitors and survive and grow. In the USA, a considerable number of valuation firms have begun to specialize in particular types of properties. For example, HVS International specializes in global hospitality consulting. Rushmore of HVS International went further and has written a book on “Hotels and Motels: Valuations and Market Studies” for the Appraisal Institute (1992) based in Chicago.

In the Asia-Pacific region, some prospective areas for specialization are:
     Plantations including palm, rubber, or fruit orchards
     Utility properties including facilities projects
      Agricultural properties
     Environment concerns and contaminated properties
     Easement, right-of-way, and appropriation

Even though limits exist for both of these suggested alternatives, they cannot be ignored and it is important that they are taken seriously. In the case of AVM, CAMA and other information technology, it is debatable whether they are a “boon or bane”. Important investment decisions should not be made without adequate scrutiny and well informed judgement. Therefore rational and intelligent people should not allow themselves to blindly believe in the judgements of artificial intelligence. In the case of specialization, qualified expertise is also needed. This will take a certain amount of time, and given time constraints, some valuers may not be able to furnish themselves with the necessary knowledge and experience in time to make the changes that will enable them to survive.

The application AVM, CAMA, and GIS technologies as well as specializing in a particular field of valuation are thus two major ways out of the present dilemma. In addition, there is still a need to diversify into related real estate business.

Diversification
There are a diverse set of fields that should be considered when thinking about ways to expand one's business under normal conditions or as alternative fields during lean times. The following are some valuation-based services:

      Survey. There are a several types of surveys that can be considered, such as building inspection,
        land title survey and certification, quantity survey, traffic count surveys and the like. Surveys in
        these areas can complement and supplement a valuer's main services.
      Research. This includes a wide range of services such as market feasibility studies (market survey,
        site analysis), financial feasibility studies for project development and/or investment, product tests,
        surveys of clients and consumers (questionnaires, focus groups, etc.).
      AVM- CAMA. Expertise in AVM-CAMA can be applied to various fields of services, types of real
        estate, and sectors of the markets. In the case of Thailand, AVM-CAMA is essential for property
        tax purposes for over 1,000 municipalities, 7,000 sub-district administrations, and 100 other local
        authorities.
      GIS. For most local authorities, the preparation of tax maps is very essential. Using GIS helps
        authorities by allowing for easy survey, remote-sensing interpretation, user-friendly programming,
        database management and other follow-up jobs. The need for this service can be very broad.
      Education. In Thailand, since 1995, the Agency for Real Estate Affairs has taught valuation, and in
       2002 has established and managed the Thai Real Estate Business School. The school operates
       under the supervision of the Ministry of Education of the Royal Thai Government. As of August
       2004, over 44 batches of its ‘fundamental course' have been organized, producing some 2,000
       students nationwide.
      Publications. Real estate publications can be another line of valuation-related business. This
       includes the publishing of text books, reference books, pocket books and journals for sale to the
       public. Publications can help improve name recognition for firms as well.

In addition, there are also non valuation-based fields of business that can be expanded or shifted into. The following are some examples:
      Agency / Brokerage. In Thailand, there is the Real Estate Brokers Association with some 200
       brokerage firms. However, if one wants to be a broker, he should not be a fee valuer at the same
       time so as to avoid potential conflicts of interest.
      Estate management. . Again, in Thailand there is the Property Management Association of
       Thailand made up of over 50 property management firms.

In addition, there are other real estate-related fields such as property development, facility management, relocation, finance and the like that valuers may be able to branch into.

Conclusion
The need to explore non-traditional areas of work is internally driven by the expansion of professional services and externally driven by the shrinkage of the conventional valuation profession. Impediments to further development of the profession include consumer doubts in the credibility of valuers, the introduction of AVM – CAMA, and the intrusion of other related professions.

To survive and develop further, valuers must seek to create opportunity amidst the impending threat by making friends with AVM-CAMA to make the most out of these technologies. In addition, they must become more specialized in their valuation expertise, applying their valuation capabilities to the field of plantations (oil palm, rubber, or fruit orchards), utility properties (including facilities projects), agricultural properties, environment concerns and contaminated properties as well as easements, right-of-way and appropriation projects.

In considering the shift to alternative fields where valuation capabilities may be of value added, the valuer may consider offering a diverse set of valuation-based services such as survey, research, AVM-CAMA, GIS, education, and publications. On the other hand, valuers must also take into consideration non valuation-based alternatives, such as brokerage, property management, facilities management and the like.

REFERENCES
Web-based References
1. Appraisal Institute, Hotels and Motels: Valuations and Market Studies, 1992.
2. International Association of Assessing Officers, Annual Conference, 2002.
3. International Association of Assessing Officers, Annual Conference, 2004.
4. Rushmore, Steve in HVS International website, 2004.
5. Uniform Standards of Professional Appraisal Practice, 2004..
6. World Valuation Congress, 2003.
7. Appraisal Today Conference, 2004, Zillious, Vicky Cassens.

Hard-Copy References
1. Bates, Mark F (2001). Interview: Our Appraisal Visitors to Thailand. Published in the VAT News, Vol.
    1/2001, January-March 2001, p.5.
2. Bond, Sandy (2003). Issues Facing Valuers in Australia: Lessons for Thai Appraisers. Published in
    the ThaiAppraisal Journal, Vol. 2, No. 2, April-June 2003, p.14-15.
3. Greenword, David (2003). Is there A Future for the Valuation Profession? Published in the
    ThaiAppraisal Journal, Vol. 2, No. 3, July-September 2003, p.6.
4. Ghyoot, Valmond (2004). International Perspectives - Valuation in South Africa (an interview).
    Published in the ThaiAppraisal Journal, Vol. 3, No. 2, April-June 2004, p.7.
5. McFarquhar, Alister (2000). Valuation Profession Under Critique. Published in the VAT News,
    Vol.2/2000, April-June 2000, p.4.

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